Update: PayPal Holds Half of Indie Developers' Money

Developers for original 2D fighting game Yatagarasu Attack on Cataclysm only receive half of their funds from PayPal.

Crowdfunding sites like Kickstarter and IndieGoGo are wonderful for getting independent games off the ground, but things don't always go as planned. Nyu Media, independent publisher for a 2D fighting game called Yatagarasu Attack on Cataclysm, successfully completed their IndieGoGo campaign last month, raising double what they posted as their goal, but they have received only a part of the funds. In an update posted on their campaign page last night, Nyu Media founder Seon King announced PayPal had restricted the company's account.

"The email from PayPal advises us that they have 'reserved' the funding and will release 'up to 50% of the funds' before Yatagarasu AoC is released and the rest only after they have verified copies of paid invoices," King said. PayPal advised Nyu Media to contact them closer to the release date beginning of next year to arrange the release of the remaining funds.

King said Nyu Media has already given PayPal documents "providing the bona fides of Nyu Media, the developer, and the campaign." Access to only half of the funds for the game concerns King. Without access to all of the funds, "it potentially derails game development."

King will contact PayPal's customer service. King said their best case scenario would be "reason and PayPal's new "Customer First" direction bring this to a swift conclusion." If that doesn't work, Nyu Media may refund PayPal contributions and arrange donations by other methods.

Update: As of this afternoon, PayPal and Nyu Media have resolved the problem. PayPal issued the following statement via email:

"We have reached out to Nyu Media and the issue has been resolved. We want to reiterate that supporting these campaigns is an exciting new part of our business. We are working closely with industry-leaders like IndieGoGo and adapting our processes and policies to better serve the innovative companies that are relying on PayPal and crowd funding campaigns to grow their businesses. We never want to get in the way of innovation, but as a global payments company we must ensure the payments flowing through our system around the world are in compliance with laws and regulations. We understand that the way in which we are complying to these rules can be frustrating in some cases and we've made significant changes in North America to adapt to the unique needs of crowd funding campaigns. We are currently working to roll these improvements out around the world."